British Prime Minister Boris Johnson will use the prospect of a Brexit cliff-edge at the end of 2020 to push for the European Union to give him a comprehensive free trade deal in less than 11 months.

In his boldest move since winning a majority in 12 December’s election, Johnson will use his control of parliament to outlaw any extension of the Brexit transition period beyond 2020.

“Our manifesto made clear that we will not extend the implementation period and the new Withdrawal Agreement Bill will legally prohibit government agreeing to any extension,” a senior government official said on Tuesday (17 December).

After the United Kingdom leaves the EU on 31 January, it enters a transition period in which it remains an EU member in all but name while both sides try to hammer out a deal on their post-Brexit relationship.

A comprehensive free trade deal would encompass everything from financial services and rules of origin to tariffs, state aid rules and fishing, though the scope and sequencing of any future deal is still up for discussion.

Sterling dropped as much as 0.7% to $1.3236 in Asia after ITV first reported the move.

By enshrining in law his campaign promise not to extend the transition period beyond the end of 2020, Johnson cuts the amount of time he has to strike a trade deal to 10-11 months from nearly three years.

While Johnson’s large majority gives him the flexibility to change the law should he need to, he is sending a message to the EU – whose leaders have cautioned London that more time would be needed for a comprehensive trade deal.

Johnson and US President Donald Trump said on Monday they looked forward to continued close cooperation and the negotiation of an “ambitious” UK-US free trade agreement.

EU deal?

If the United Kingdom and the EU failed to strike a deal on their future relationship and the transition period were not extended, then trade between the two would be on World Trade Organisation (WTO) terms – more burdensome for businesses.

The EU hopes to start trade talks with Britain by March, leaving just 10 months to strike a deal and get it approved by London and the EU, including member states’ parliaments.

The EU insists it will not seal a trade deal with a large, economically powerful neighbour without solid provisions to guarantee fair competition.

The EU’s demands will focus on environmental and labour standards, as well as state aid rules to ensure Britain would not be able to offer products on the bloc’s single market at unfairly low prices.

Britain’s conundrum is that it will be under pressure to loosen rules on agricultural and food standards to strike a bilateral trade deal with the United States.

But this would be crossing a red line for the EU, which would restrict access to its market to protect its own producers.

“It will be very complicated. It’s about an array of relations, in trade, in fishing and cooperation in security and foreign policy,” German Chancellor Angela Merkel told an EU summit news conference on Friday.

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Comments

What will be the EU’s reaction to Johnson’s intention to legally leaving at the end of the transition? It is thinking of it now of a reply?? He is imposing a pressure. Bottom-line should be ready to leave without an agreement even setting up border controls if it is going to be under WTO rules. Give rather what is possible in a year which is not a deep agreement. Waiting to hear what is the EU’s position. Wait and see for the moment??

A Free Trade deal is only difficult is the EU allows M Barnier to make it so. Currently there is full alignment. The deal is about how much divergence there will be in future.
The UK is the fifth largest world economy. Currently we are in the European orbit. Our trade negotiators will now look at competing bids from the rump 27 EU and the US and economically allied states. If the EU 27 put in the sort of weak bid that is talked about, the UK will drift away into an Atlantic alignment that could last a generation.
Nor is it just trade. It should also be defence and security. For that kind of Europe, bare adherence to NATO alone is enough and never more than the USA does..

Fishing at least is straightforward. When the UK finally leaves the EU from 31st December 2020, under international law, it will automatically assume the rights and responsibilities of an independent Coastal State. An independent Coastal State has jurisdiction over the exploration and exploitation of marine resources in its adjacent section of the continental shelf, taken to be a band extending 200 miles from the shore.

At present, France, Denmark, Netherlands, Belgium, Ireland and Spain between them take eight times as much fish from UK waters as the UK does. To continue to fish in UK waters once we have left the EU (and its Common Fisheries arrangements) will require the EU to negotiate access, which the UK can grant or withhold.
In practice, after 40+ years in the EU, the UK has neither enough boats or fish processing facilities. Access on a progressively reducing scale can be probably be agreed for a few years.

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